2015 (11) TMI 220 - AT - Service Tax

Rejection of Refund - Export of Bauxite ore - Goods Transport Agency - Revenue contends that there are no rules or notification objecting payment of service tax by a proprietorship concern on behalf of transport agency to whom they pay freight charges and assessee has correctly paid the tax on their behalf while assessee states that being sole proprietorship concern they are not liable to pay service tax for Goods Transport Agency Service either as consignor or consignee - Revenue further contended that granting of refund will amount to unjust unrichment and first appellate authority has erred in their observation. Held That - Delivery Challan clears that transportation of Bauxite Ore was undertaken by Goods Transport Agency on behalf of assessee who is a sole proprietorship firm - CBEC in Circular No.79/9/2004-ST clears that person making payment towards freight would be liable to pay service tax in case consignor or consignee of goods transported falls in one of category mentioned therein - Assessee does not fall in any such category - Impugned order of first appellate authority is correct - Decided in favour of assessee.

Summary

Issues:
Refund of service tax paid under Goods Transport Agency category.

Analysis:
The appeals were against Orders-in-Appeal dated 30.08.2010 regarding refund claims filed by the respondent assessee, who paid service tax under the Goods Transport Agency category. The Department argued that the tax burden was passed on to overseas buyers, thus refunding would lead to unjust enrichment. The respondent contended that as a sole proprietorship concern, they were not liable to pay service tax for such services. The Circular No. 79/9/2004-ST clarified that a person making payment towards freight would be liable to pay service tax only under specific conditions. The first appellate authority favored the respondent, stating that the tax was paid under a mistake of law and should be refunded. The authority criticized the Department for not verifying the taxpayer's status before accepting the payment. The issue of time-bar and unjust enrichment did not arise as the payment was deemed a deposit, and the Department was held liable for interest. The Revenue's appeals lacked evidence to counter the respondent's status as a sole proprietorship concern. Sample delivery challans confirmed that the respondent had procured Bauxite Ore and was not liable to pay service tax. The Circular clarified the conditions under which service tax should be paid, which the respondent did not meet. Therefore, the first appellate authority's decision was upheld, and the appeals were rejected.